Showing posts with label legacy. Show all posts

Monday, October 8, 2018

Without regular reviews of your estate plan, here’s how a ‘paperwork nightmare’ could ruin your legacy

Without regular reviews of your estate plan, here’s how a ‘paperwork nightmare’ could ruin your legacy

by Tom Alberts Oct 8, 2018

Summary: The experience of a Missouri man who nearly lost his home in a tax sale because of a planning oversight – a failure to review and update documents – provides a valuable lesson. Life events such as a family member with special needs, deaths of loved ones, illness, incapacity, marriage, births and divorce require that you make sure your plans are adjusted accordingly. As life goes on, planning documents – such as your will, trust, beneficiary designations and powers of attorney among them – should be revised as necessary by a qualified attorney. Otherwise, you could wind up like the guy in St. Louis who had to fight to stay in his residence and off the streets.

A “paperwork nightmare” nearly cost a Missouri man his home of more than five decades, according to a TV news report in St. Louis.

It’s a dreadful estate planning slip-up that could happen to anyone.

“His story will have you double-checking some important paperwork all of us should be filling out,” says the report that aired Oct. 1, 2018. The story highlights an important lesson about unforeseen life events and how they can lead to devastating estate-planning blunders.

The camera focuses on the original 1963 certificate of title for the property, a modest home in suburban St. Louis. The yellowing document shows the property was clear of liens and encumbrances – other than the $8,000 mortgage at the time – and that no taxes were owed when the title was issued.

Donald Eckhard, 56, has lived in the quaint red-brick home in a quiet neighborhood since he was 2. Donald tells the interviewer he’s considered “not of legal mind” because of a brain injury he suffered as a teenager. His status as a special-needs adult, he says, leaves him between “a rock and a hard place” when it comes to managing his own affairs.

Recently, a letter from the collector of revenue arrived in the mail, and its message was serious. It was a stunning notice: The property had been sold because of delinquent taxes, and the purchaser sought possession of the property. Donald owed three years of back taxes and penalties.

When Donald’s father died in 1991, his mother, Mary, established a living trust to support Donald financially after her eventual death. Mary, who died about three years ago, had nominated her sister, Donald’s Aunt Sarah, as her successor trustee, giving Sarah responsibility to take over management of Donald’s financial affairs. One of Aunt Sarah’s obligations as successor trustee for her special-needs nephew was to pay his property taxes.

An unexpected life event, however, prevented Aunt Sarah from conducting her fiduciary duties, putting Donald at risk of losing the only home he has ever known. Aunt Sarah developed Alzheimer’s disease.

A family friend learned of Donald’s plight and reached out to help. Meanwhile, the deadline to pay the back taxes and penalties to redeem the property quickly approached. That’s when the friend contacted the TV station for assistance.

Where would he go if he lost his home? “The street I guess,” Donald tells a reporter. Part of the legacy Donald’s mother left behind was a home and financial support for her son. Now, her plan and his support were in serious jeopardy.

Even though Donald only collects $490 monthly in disability income, he doesn’t lack resources to pay his tax bill. Because Donald requires someone to manage his financial affairs, he was unable to access bank accounts in his name that hold the proceeds of his inheritance. The problem: Aunt Sarah and Donald’s mother failed to nominate a successor trustee for Donald, and there was no living person assigned to handle his finances.

Unfortunately, by the time Aunt Sarah became ill with dementia, it was too late for a family discussion and to update the estate plan and transfer her duties. As a result, Donald’s trust funds were inaccessible to him – or anyone else – and the taxes went unpaid. Delinquent taxes led to the tax sale, potentially driving a man into homelessness over a paperwork nightmare.

The good news is that the helpful friend contacted a qualified attorney to investigate Donald’s situation. The lawyer was able to petition the court to serve as Donald’s trustee. The back taxes were paid before the deadline, and Donald was able to remain in his home. It was a close call and a tangible example of why proper planning and reviews are required to avoid a document-driven disaster.

Are you prepared for unexpected life events?

You’ve made a significant achievement if you have a comprehensive estate plan with a last will and testament, a revocable living trust, powers of attorney for health care and finances, an advance health care directive, appropriate beneficiary designations for financial accounts and insurance policies as well as funding strategies to deal with the possibility of long-term care.

But problems arise when those carefully crafted plans get hidden in a filing cabinet somewhere, out of sight and out of mind, ignored and neglected. Unexpected life events can upend even the best-laid plans that are out-of-date and not revised to keep up with the times.

In Donald’s case, his mother’s estate planning oversight – not planning for incapacity and not naming an alternate successor trustee to handle Donald’s affairs – was easily avoidable. Her mistake is an example why it’s important to review and update your will, trust, powers of attorney, advance health care directive and beneficiary designations regularly and following major life events. The law requires modifications to your plan be done while you are of sound mind. Before you become seriously ill or incapacitated, you should utilize important estate planning tools that protect your interests, honor your intentions and manage your health care and finances. For example, your trust can be structured so that your successor trustee and your hand-picked agents with powers of attorney can oversee your affairs and meet your obligations to others if you wind up in a situation like Aunt Sarah and Donald.

If there is a new member of the family, the death of a loved one or the acquisition or disposition of a significant asset, it’s time to review and amend provisions of your will, trust and other documents as necessary. A new baby means there’s a new beneficiary with a new universe of considerations. You may want to establish a trust to address a child’s special needs (like Donald’s), future education and financial well-being. You can appoint successor trustees and alternates to manage the trust in your absence and clearly state your intentions in the trust document.

Perhaps you’ve recently discovered a future beneficiary of your trust has gambling issues, a substance abuse problem or just a huge hole in his pocket. You may want to add spendthrift safeguards in the language of your trust document. Maybe potential heirs are being sued or face legal judgments. Their future inheritance could be exposed to a successful claimant unless a trust is properly revised. A blended marriage or complicated divorce among any of your beneficiaries is another reason to review and update your plans.

Paperwork is vitally important. That’s especially true for trusts. For a trust to be valid, transferred assets must be fully “funded” into it. The documentation must be in order, reviewed and updated to reflect life’s changes. When transferring ownership of an asset into a trust, the complexity of the procedures varies. For example, to merely open a checking account for a trust, banks usually require copies of the trust instructions, the notarized signature page, amendments, a description of trustee powers and the list of beneficiaries. Formalities need to be followed for the host of other assets – savings and retirement accounts, real estate, stocks, bonds and other investments among them.

Conclusion

Fortunately, membership with Legacy Assurance Plan provides valuable resources and guidance to develop comprehensive estate plans that take life’s contingencies into consideration and leave a positive impact for generations to come. Periodic reviews are part of the important services Legacy Assurance Plan offers. There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.

This article written and published by:
Legacy Assurance Plan
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
info@legacyassuranceplan.com (email)
#legacyassuranceplan
@assuranceplan

Thursday, August 16, 2018

All shook up: 41 years after Elvis’ death, his financial legacy left to daughter dwindles

by Tom Alberts Aug 16, 2018

Elvis and president Nixon at the white house

During a 1970 visit to the White House by Elvis Presley, President Richard M. Nixon, left, admires cufflinks worn by the beloved celebrity. At right is presidential aide Egil “Bud” Krogh Jr., who helped coordinate the famous meeting. (Photo by White House photographer Oliver F. Atkins)

Summary: When Elvis Presley died on Aug. 16, 1977, he left a larger-than-life legacy. Considered the “King of Rock ‘n’ Roll,” Presley became an iconic figure whose earning power after his passing generated millions in additional income for his estate and his lone surviving heir, his daughter Lisa Marie Presley. In the decades since she inherited an estimated $100 million, she claims her share of her dad’s legacy has dwindled to $14,000. It was an outcome Elvis likely never envisioned for his daughter, who was 9 when her famous father died. She blames negligence by a former business manager; the former business manager claims her excessive spending is the problem.

August of 2018 marks 41 years since the death of Elvis Presley stunned and saddened millions of his faithful fans around the world. More than four decades later, many loyal admirers of the “King of Rock ‘n’ Roll” remain forever lodged in a hotel of heartbreak over his passing.

Meanwhile, his daughter and only surviving heir, Lisa Marie Presley, has been singing the blues for reasons of her own: the decimation of a $100 million inheritance amid allegations of reckless spending by her and negligence by her former business manager, according to numerous media reports that began to appear following the 40th anniversary of his passing.

In a lawsuit she filed alleging mismanagement by her former manager, Barry Siegel, Lisa Marie claimed she was down to her last $14,000.

It’s a situation that might have left her hip-swinging dad, to borrow from one of his most famous lyrics, “all shook up.”

At the time, Presley’s death was a shock but understandable, given his highly publicized history of drug abuse during his legendary career. Although his rock-star lifestyle helped lead to his eventual demise, Elvis knew he wasn’t immortal and executed a last will and testament five months before his death at age 42. The King left his estate to his father and his grandmother, but they died in 1979 and 1980, respectively. His daughter was named as his other heir.

Elvis’ will specified that once his debts were paid, the remainder of his assets were to be placed in a trust for his heirs. He also directed that Lisa Marie’s inheritance be provided to her once she reached the age of 25. In 1993, Lisa Marie, at the age of 25, became eligible to receive the assets of his estate, estimated at $100 million at the time. Elvis’ widow, Priscilla, helped grow the estate from an estimated $2 million or so at the time of his death by utilizing his Graceland mansion in Memphis, Tennessee, as a tourist attraction and engaging in other profitable business ventures. In 2005, Lisa Marie had cashed in most of her share of those ventures that had produced a steady revenue stream.

From an estate planning perspective, what could Elvis had done to prevent the financial crisis that now confronts his daughter? Short of having a crystal ball to go along with his blue suede shoes, Elvis during his lifetime could have created a special type of trust known as a spendthrift trust. Perhaps Elvis had an inkling that it would be a good idea for Lisa Marie to reach a stage of adulthood where she could act responsibly with an enormous windfall. After all, he required that her eligibility to inherit be delayed until age 25. Had the King known better, he might have made her eligible for a portion of her trust-held inheritance at subsequent intervals – age 30, 40 or 50 (Lisa’s age in 2018), for example.

In the meantime, his financial legacy has become the subject of suspicious minds sparring in a courtroom.

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life’s contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

Friday, February 16, 2018

Don’t Leave Your Legacy to Chance… Always Make Sure You Have a Fully Updated Plan

Summary: Your estate plan is your legacy. Your legacy is too important to leave open to uncertainty. That’s why it is so important to make sure that you have a proper and complete estate plan in place and that you review (and update, as needed) your plan regularly. With periodic reviews, you can ensure that your plan, including not only your will and living trust, but also your powers or attorney, living will, pay-on-death accounts and transfer-on-death assets are sufficiently updated to ensure that all of them will work together harmoniously to carry out collectively the goals and desires that you want.

Here’s an example from Tennessee of the risk of uncertainty. The court case surrounding the estate of a man named Stephen contains a somewhat familiar estate planning lesson, but with a bit of a twist. In August 2001, Stephen enrolled a retirement plan for Nashville-Davidson County metro employees. Within his plan documents, Stephen designated his wife, Mary Beth, as the beneficiary.

Just eight months later, though, Stephen and Mary Beth divorced. As happens with many divorce cases, the spouses worked out something called a “marital settlement agreement,” which is a settlement of issues (such as, for example, property division or alimony) that would otherwise need to be decided by the judge. In this couple’s agreement, which the court approved, Stephen got “all right, title, and interest in ‘all retirement that he may have through his employment.’”

Almost 12 years after the divorce, Stephen died. In the intervening 12+ years between his enrollment in the retirement plan and his death, Stephen never executed a beneficiary form other than the original one that named Mary Beth as his beneficiary. So, when he died, two very distinct entities made claims to the retirement plan seeking to receive the payout: one by Stephen’s estate and one by his ex-wife.

The case went to trial and the trial ruled in favor of Stephen’s estate, concluding that the settlement agreement signed as part of the divorce had the legal effect of revoking the original beneficiary designation, which meant the proceeds belonged to the estate. (Whenever you have an account that allows you to name a beneficiary but you have no valid beneficiaries named, then it generally goes to your probate estate.)

The case wasn’t over, though. Mary Beth appealed… and she won. The appeals court explained that the only way to revoke a beneficiary designation was to use the process dictated by the plan. Stephen’s plan stated that, to make changes or revocations, the plan participant (in this case, Stephen) was required to send a written request to the plan administrator detailing the changes he wanted to make. In other words, Stephen’s plan had no provision for automatic revocations through court documents like divorce settlement agreements. That meant that the original beneficiary designation was still valid and Mary Beth was the rightful recipient of the plan proceeds.

Stephen may have not wanted Mary Beth to receive those funds. Stephen may have though that the resolution of his divorce case with Mary Beth took care of all that. One of the big “take aways” from this is… don’t assume. Make sure that you have a complete plan in place, including your will, powers of attorney, advance directive, living trust and non-probate transfer accounts. Also make certain that all parts of your plan, including your beneficiary designations, are routinely reviewed and updated as necessary to reflect your current wishes and life circumstances.